3 Numbers to Watch: BoE Minutes, US Housing Starts & Swiss ZEW

Data from the ZEW survey confirms that investor sentiment in Germany improved during September on the back of the European Central Bank’s annoucement that it would launch a new bond-buying plan. The index for economic conditions rose to -18.2 from -25.5, the first gain in five months, but questions remain over how the new programme will be rolled out. A meeting between European finance ministers last Friday in Cyprus failed to produce any detailed timeline and there are doubts that Spain will accept the conditions of a bailout programme.   

For today we have a few interesting releases to look out for. The Bank of England is due to release minutes from its latest monetary policy meeting, with talk of further quantitative easing (QE). Meanwhile, the ZEW survey in Switzerland and data on US Housing Starts are also due out.

Bank of England minutes (08:30 GMT) Following yesterday’s data release showing CPI in the UK falling to 2.5%, word on the street is that the Bank of England may be preparing to launch a further round of QE. Minutes from the Bank’s September 6 meeting should provide insight into whether this view has some traction. The MPC voted 7-2 in favour of adding another GBP 50 billion to QE in July, and it is now expected to add a further GBP 50 billion before the end of the year as the economy slows. In August the Bank’s MPC conceded that UK growth was now more likely to be below than above its historical average rate going forward, with the economy contracting by 0.5% in the three months to June, the third consecutive quarter of decline. The Bank of England will also be under pressure to follow the Federal Reserve and European Central Bank in taking action.

US Housing (14:30 GMT) Data on US housing starts and existing home sales is expected to pick up during August as demand for homes builds. The number of new houses built in the US is seen increasing by 765,000 for the month, up 2.6%, while existing home sales are seen rising by 2%, according to analysts’ estimates. However, the number of building permits issued is forecast to decline by 2%, compared to the previous month. Home prices posted their best performance since the fourth quarter of 2005 during the second quarter of 2012 when the S&P/Case-Shiller increased 2.2 percent. The Federal Reserve’s decision to buy up USD 40 billion of mortgage-backed securities a month until the end of the year is expected to give the market a further lift, as loans for new homeowners becomes cheaper. But an article in the Financial Times has warned that delays in processing mortgage applications could mean the effects won’t filter through to borrowers for some time.

Switzerland ZEW Economic Expectations survey (09:00 GMT) The latest ZEW survey from Switzerland will provide valuable insight into the economic outlook for the country during the month of September. In August, expectations for the Swiss economy improved by 9.2 points to -33.3 points, although it will be difficult to repeat last month’s performance. At its monetary policy meeting last week, the Swiss National Bank pledged to purchase foreign currency in unlimited quantities to uphold its defence of the franc. This was despite revisions to its inflation forecast, with CPI falling 0.6 percent in 2012, while the economy is expected to expand by just 1 percent compared to a June projection of 1.5 percent.

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